A Slow Economic Recovery Puts More Focus On Elections

William RutherfordLast month’s column, “Is there any good news among the grim?,” cited several instances of progress on the economic front. April has brought more good news, among still grim employment numbers.

The gross domestic product increased 3.2 percent last quarter. Though positive, the number was smaller than expected and barely maintained the jobs necessary to keep unemployment at current levels. GDP needs to grow at least 5 percent to make a dent in unemployment. But even as unemployment remained stubbornly high, new applications for unemployment declined. President Obama said the economy must create more jobs.

The GDP rate is growing slower than after previous recessions. The increase in GDP was largely due more to restoring inventory balances than end-point sales.

The Conference Board’s Leading Economic Index increased for the third straight month. Ken Goldstein,
economist at The Conference Board, said, “The indicators point to a slow recovery that should continue over
the next few months. The leading, coincident and lagging series are rising. Strength of demand remains the big question going forward.” Also, the Conference Board’s Consumer Confidence Index, which had rebounded in March, continued to increase in April.

Inflation remained subdued. The Federal Open Market Committee kept interest rates low and indicated that
they would remain low for an extended period. Clearly the Fed believes that any recovery we are seeing needs more time to gather strength.

The housing market sputtered after an uptick resulting from federal tax credits for new home purchases. As
soon as the credit expired, the market slumped.

The FDIC says that only 200 banks will fail this year, down from their earlier forecast of 300 bank failures.

Equity markets showed strength for the year to date, even […]